100% Salary Sacrifice

billchecker1

Have recently started a second job, working on Saturdays at a University.

They add another 6% as an employeers contribution and I have chosen 6 funds using Avivas pension service.

Now I dont have any debts apart from my mortgage, wont miss the money so two months ago I asked them to put 100% of this into a pension. Taking this as income would mean I am over the higher rate threshold.

The first months payslip showed they had deducted 20% tax, no NI contributions and the 6% from the employer.

How can I reclaim this tax? Should I get an accountant?

zagfles

No you just need to get an understanding of how the pension and PAYE work, it's pretty easy to reclaim tax if you've overpaid.

For a start, you can't do 100% "salary sacrifice" due to national minimum wage rules. You can contribute 100% to your employers scheme as a normal pension contribution, but not as salary sacrifice.

The difference between salary sacrifice and normal pension contributions is that you save NI with sal sac. You save tax with both.

What is your tax code? And how can they have deducted 20% tax if you put it all into the pension, your payslip would have been negative take home pay!

Paul_Herring

zagfles wrote: »

For a start, you can't do 100% "salary sacrifice" due to national minimum wage rules.

I presume that's on a per-job basis, unlike (say) the income tax which takes both into account? gov.uk seem a tad silent on the matter. (i.e. the OP's first job of, presumably above minimum wage, is disregarded in respect of the second job's wage for the purposes of SS?)

zagfles

Paul_Herring wrote: »

I presume that's on a per-job basis, unlike (say) the income tax which takes both into account? gov.uk seem a tad silent on the matter. (i.e. the OP's first job of, presumably above minimum wage, is disregarded in respect of the second job's wage for the purposes of SS?)

Yes, an employer can't pay below NMW just because you've got another job that pays above NMW. Unless perhaps they were with the same employer, not sure about that?

greenglide

the OP's first job of, presumably above minimum wage, is disregarded in respect of the second job's wage for the purposes of SS?)

The minimum wage is a rate per hour isnt it?

Just because this is a secondary employment does not mean they can pay less than the minimum wage.

As to whether HMRC and the employers rules will allow the reduction of pay by salary sacrifice is the question. My employer does not allow a reduction below the minimum wage and the annual update process enforces this.

rpc

greenglide wrote: »

My employer does not allow a reduction below the minimum wage

The law does not allow a reduction below the minimum wage.

Paul_Herring

greenglide wrote: »

Just because this is a secondary employment does not mean they can pay less than the minimum wage.

There was no suggestion that they were paying less than the minimum wage.

What the rules prevent is sacrificing such that the net amount after the sacrifice is less than that.

What I was asking was if the first job results in an after sacrifice amount greater than (total hours worked in both jobs)*(NMW), can that be used to allow a sacrifice of 100% of the wages in the second job.

jamesd

Each job must by law pay the national minimum wage for the hours worked. It make no difference whether it is a first or second job.

billchecker1's contributions are clearly not being paid by salary sacrifice but by a deduction from salary. Nothing prohibits making pension contributions from 100% of net pay. Check the pension scheme to verify that 25% has been added to the amount deducted form pay for pension contributions to deliver the basic rate income tax relief. Contact HMRC if you believe that you're entitled to some higher rate relief on the money.

billchecker1

Sorry my confusion over the term "salary sacrifice". It is however 100% pesnion contributions.

Both of my wages are over the minimum wage.

My tax code for my main job is 1032L and for the second job (where I am 100% pension) is BR.

I have rang the tax office and they tried to put the tax to nil but said the system wouldnt allow it. She seemed very unsure.

zagfles

billchecker1 wrote: »

Sorry my confusion over the term "salary sacrifice". It is however 100% pesnion contributions.

Both of my wages are over the minimum wage.

My tax code for my main job is 1032L and for the second job (where I am 100% pension) is BR.

I have rang the tax office and they tried to put the tax to nil but said the system wouldnt allow it. She seemed very unsure.

It's still not making sense. If you pay 100% into your pension how are they deducting tax? Your take home would be negative, did you pay them on payday?? What does your payslip look like?

jem16

billchecker1 wrote: »

Sorry my confusion over the term "salary sacrifice". It is however 100% pesnion contributions.

Both of my wages are over the minimum wage.

My tax code for my main job is 1032L and for the second job (where I am 100% pension) is BR.

If you have paid tax but contributed 100% of your wages it sounds like you're paying from net pay as opposed to gross pay. If it was gross pay and you paid 100% contributions there wouldn't be any tax.

Could you provide the figures from your payslip so we can be sure?

I have rang the tax office and they tried to put the tax to nil but said the system wouldnt allow it. She seemed very unsure.

No I don't think it would either as you do have taxable pay. You should really tell HMRC you have made another pension contribution and they can adjust your tax code to get the extra higher rate tax relief. I assume you will be over £41k if you add up both incomes and take off pension contributions?